Tuesday, December 1, 2009
I have had occasion to take the train from Bridgeport to Baltimore for business trips and as I pass the backend of the cities and buildings along the route it is apparent that our industrial sector played a huge historical role in the growth of urban communities and our economy at large. As the train would click clack its way along the rail I would peer out the window and visualize what used to be vibrant industrial cities. Still visible are the painted billboards on the side of the brick walls of these aging industrial structures. Looking closer I can trace rusting dormant track extending past the loading docks that a century ago moved value added products, the outcome of applying human labor, to destinations throughout our country.
In our current reality, once productive industrial businesses are for the most part long gone and left in their place is an economic void. Around these pockets of despair and hopelessness are people searching for any means and opportunity to provide for their families. Lacking a secure job families break down from the financial pressure. Many end up in the prison system, undereducated and with little hope to ever live the American dream. This is an extreme waste of human capital. Maintaining a prison system is very expensive and the productive society ends up footing the bill with higher taxes. This is an example of unproductive tax policy. But it doesn’t end there. To fund the schools and services in our stressed out cities government imposes forever escalating taxes on home owners and surviving businesses, dampening investment and fueling a vicious economic downward spiral.
How do we reverse this trend?
In my view we must start with the notion that although taxes are required for the collective well being of society, some taxes are better than others. A smart tax policy is a wealth multiplier. A bad tax smothers the means of production. We need Smarter Tax Policy for the Industrial Sector.
Not everyone is qualified to run a Hedge Fund or be an Investment Banker. Most of us just need a good steady secure job in a factory.
Tuesday, November 24, 2009
Our system has always been based on inflation, planned obsolescence, (waste/inefficiency), and the ability to leverage a perceived asset (borrowing). Once that perceived asset is "marked to market" or declines in value in real terms, there is no ability to borrow against the asset or, as it is today, loans become upside down.
When Social Security was first introduced 42 working people paid into the entitlement for every one person collecting the benefit. Today only 3 -5 people pay in.
My mother and father bought their home in 1959 for $31,000, a large sum of money. Today it is worth 25 times more but in inflated dollars.
We have run out of the ability to leverage unless we reinvent how we leverage.
Building “Green” 4 family homes may be a form of leverage. Buying a multi- family home with other family members may be a solution to leveraging immediate and extended family income.
Governments bonding debt is dangerous. It is like applying “Bondo” to a hole in a car. It just plugs a gap but there remains structural damage.
If no one applied to go to college for 10 years, what would happen to tuitions?
If we feed every family in Africa 4 meals a day and provided shelter, what would the birth rate in Africa be?
If Health Insurance is "free" would people shop around for the best price for services?
When demand drops or competition increases, prices will drop. We may experience what Japan is currently experiencing: deflation. And that would end our ability to leverage and dampen our capitalistic system. China has an authoritarian, centrally planned form of capitalism. The USA and other countries employ a democratic free market form of capitalism. The two are very different. The Chinese can manipulate trade and exchange rates to their benefit. Their fear is that the Chinese population, being very diverse and large, will be difficult to control if organic growth and exports slow down. They have a huge problem. And so does the world economic order.
The 1% consumption tax proposal I use in my web site, www.helpformanufacturers.org, is a way to have every American citizen, (and illegal visitors), become an investor and stake holder in our Health Care system. I am confident that all of us waste more than 1% on nonsense that contributes little or nothing to our well being. A lot of this junk comes from China.The 1% would be linked to the GDP and will by definition provide additional funding as the economy expands. Businesses could then redeploy cash flow for re-investment within their business models. This is an example of Smart Tax Policy.
Monday, November 9, 2009
10.2% unemployment (really 15%) and an average 33 hour work week is a political game changer.
“Building a stronger United States of America, by employing Smart Tax Policy”
We require a national industrial sector tax policy……….
Truth, Justice and the American Way!
Printing money for temporary job creation is not an example of a long term vision for our country. We require industrial investment and a climate to unleash the risk takers.
Tax people not businesses! Create more tax payers and no free lunches. Everyone must have some skin in the game.
If my company could save profit pre tax as described in my proposed Senate Bill, I would have the option to build my own hydrogen generator and get off the grid! That is an example of smart tax policy and a great way to help reduce green house gases.
Do not penalize the winners. Create a path and environment for further national investment. A good job is the best social policy. Period.